NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A027100010048-8
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 22
• Document Creation Date: December 22, 2016
• Document Release Date: July 5, 2012
• Sequence Number: 48
• Publication Date: November 15, 1974
• Content Type: REPORT

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Top Secret
National Intelligence
Bulletin
Top Secret
N?_ 654
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National Intelligence Bulletin
November 15, 1974
SOUTH KOREA: Opposition continues to attack repressive-
ness of Pak regime. (Page 1)
PORTUGAL: Lisbon continues to be-interested in culti-
vating Arab goodwill. (Page 2)
INTERNATIONAL FINANCIAL DEVELOPMENTS: Dollar declined
sharply yesterday; gold reached record high. (Page 4)
ITALY: Military concerned about Italy's ability to ful-
fill its commitment to NATO. (Page 5)
USSR-FRANCE: New economic cooperation agreement being
negotiated. (Page 6)
USSR: Demichev appointed minister of culture.
IRAQ: Significant cabinet shakeup. (Page
INDIA: New Delhi reportedly will purchase MIG-23s.
Page 13)
ANGOLA: Order restored in Luanda. (Page 14)
CHINA: Peking continues to curtail agricultural im-
ports. (Page 15)
EC-ENERGY: Members debate energy proposals. (Page 16)
FOR THE RECORD: (Page 19)
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National Intelligence Bulletin November 15, 1974
Groups opposing President Pak appear intent on build-
ing up the pressure on him prior to President Ford's visit.
Pak's opponents wish to dramatize the repressiveness of
the regime.
Opposition leader Kim Yong-sam and seven colleagues
were briefly detained today after leading a small dem-
onstration in protest against the constitution. As many
as 50 members of the National Assembly marched with Kim
to the entrance of the Assembly building, where they were
met by 100 government party members and 200 riot police.
At a press conference yesterday, Kim said his party
would immediately spearhead a struggle using "all methods
regardless of "sacrifices." He renewed demands for con-
stitutional reforms, including direct, popular election
of the president. The present constitution, pushed
through by Pak in 1972, provides for indirect presidential
elections by a body handpicked by the government. Pak
has refused to consider any change.
A similarly strong speech by Kim early last month
was followed by large-scale demonstrations by students
and Christians. This could happen again. Well-attended
Christian protest meetings have been more frequent in
recent weeks, both in Seoul and in the major provincial
cities. Feelings among students still run high, although
student demonstrations have been curtailed by the closing
of universities.
President Pak is following a relatively restrained
policy toward opposition activities
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National Intelligence Bulletin November 15, 1974
Foreign Minister Soares' swing through Tunisia and
Libya during the past week reflects Lisbon's continuing
interest in cultivating Arab goodwill.
In both countries, Soares stressed the importance
Portugal attaches to improving its relations with the
Arab states. The Portuguese are interested in attracting
Arab investments and ending the Arab oil boycott that
began when the former Portuguese government allowed US
planes to use the Azores base while airlifting supplies
to Israel in October 1973.
Soares implied at a press conference in Tunis that
the US could no longer count on using the Azores in the
event of another round of fighting between the Arabs and
the Israelis. If this were to occur, the Portuguese
government would make a decision "in conformity with
its interests." Minister Without Portfolio Vitor Alves
adopted a similar line at a Brussels press conference,
insisting that Lajes is a NATO base and "must be used
in a NATO context."
A recent editorial in the liberal Lisbon weekly
Expresso--reportedly written at the suggestion of Presi-
dent Costa Gomes' office--provides additional details
on Lisbon's "Arab offensive." It notes that, in addi-
tion to Soares' mission, the Portuguese have taken a
number of measures to bring about a rapprochement with
the Arabs. These include Costa Gomes' reference to the
necessity for closer ties with the Arabs in his recent
UN address, a presidential message calling for improved
relations that was delivered before the recent Arab sum-
mit in Morocco, and the planned visit to other Arab
states by Minister Without Portf lio Melo Antunes. This
visit had previously been billed as
an attempt to discuss with Algerian President Boumediene
the possibility of Portugal leaving NATO and joining the
nonaligned group.
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National Intelligence Bulletin
November 15, 1974
The editorial noted, however, that although nonalign-
ment has been discreetly defended in some Portuguese
political circles, it has certain disadvantages--includ-
ing the certainty of alienating the US and the unrelia-
bility of the Arab oil-producing states as sources of
aid, despite their wealth. The article points out that
Arab oil money has been deposited in "safe" Western
countries.
Not all the Arab countries have been receptive to
Lisbon's courtship. Libya's Qadhafi, for example, ad-
vised Soares to hurry the pace of Portugal's decoloniza-
tion measures if it wished to demonstrate its sincerity
and persuade the nonaligned states to establish closer
ties with Portugal.
Despite the mixed response Portugal seems to be
eliciting in its courtship of the Arabs, it is clear
that Lisbon is attempting to signal that it could develop
other options at a time when negotiations for the renewal
of US base rights in the Azores are under way.
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National Intelligence Bulletin
INTERNATIONAL FINANCIAL DEVELOPMENTS
November 15, 1974
The dollar declined sharply yesterday in hectic
trading, while the price of gold set another record at
$188.25 an ounce. The dollar declined most against the
Swiss franc, which gained 3.3 percent, bringing its ap-
preciation to more than 7 percent over the past month.
Dealers attributed the rise in the price of gold
mainly to renewed currency uncertainties.
Several factors apparently helped contribute to
the dollar's decline:
--West German Chancellor Schmidt's statement Wednes-
day evening that he had no objection to seeing a
further rise in the mark's value, combined with
the apparent absence of heavy central-bank inter-
vention, helped dispel rumors circulated last week
that central bankers had agreed to prevent further
substantial declines of the dollar.
--The Federal Reserve's decision to restructure re-
serve requirements was taken as another indication
that there would be further reductions in US short-
term interest rates.
--The announcement of the October wholesale price
increase in the US.
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National Intelligence Bulletin November 15, 1.974
Galloping inflation and a continuing political
crisis are undermining Italy's ability to fulfill its
military commitment to NATO. Left-of-center elements
within the government have recently become more asser-
tive and are likely to press harder for increased spend-
ing on social programs at the expense of the military.
Attache reporting reflects the deep concern of
Italian military leaders about the ability of the armed
forces not only to meet NATO standards but even to ful-
fill the basic mission of defense of national territory.
--According to Admiral Gino de Giorgi, the Italian
chief of naval operations, the navy cannot, at pres-
ent levels of ship construction, continue to meet
its NATO commitments. By 1984, the navy will have
"ceased to exist" for all practical purposes.
--Italian air force pilots were not able to main-
tain NATO standards for flight training in 1974,
and shortages of ammunition will continue to limit
opportunities for live-fire exercises. Unless
additional funds can be made available for procure-
ment of aircraft and other equipment, the air force
will find itself in a difficult situation by the
end of this decade.
--Many army combat units earmarked for NATO are
maintained at strength levels far below the alli-
ance's minimum standards.
--Current budget proposals for 1975 envisage a
40-percent cut in funding for military research
and development.
Italian service chiefs are attempting to cope with
rising prices by cutting nonessential expenditures.
They also are undertaking limited reorganizational mea-
sures which would make it possible to fulfill their re-
sponsibilities more efficiently and economically. Such
action will allow Rome to achieve some immediate savings,
but they will. not provide any long-range solution to
Italy's defense spending problems.
-5-
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National Intelligence Bulletin November 15, 1974
There appears to be no prospect for arresting the
decline, in real terms, of defense expenditures. The
10-percent increase proposed for the 1975 defense
budget--from $4 billion to $4.4 billion--will be more
than wiped out by the 19-percent inflation rate. Italy
plans to spend about 60 percent of its 1975 budget on
personnel costs, and about 16 percent on major equipment,
ammunition, and missiles.. The likely continuation of an
imbalance between operating costs and capital expendi-
tures over the next several years probably will force
Italy to stretch out important equipment modernization
programs.
USSR-FRANCE
Paris and Moscow apparently have completed negotia-
tions for a five-year economic cooperation agreement and
a ten-year industrial cooperation agreement. Both doc-
uments, however, are merely lists of aspirations rather
than concrete plans for action. Moreover, they are
limited by an annex stating that any part of the agree-
ments conflicting with present or future EC regulations
will be inoperative. The agreements will be signed at
the ministerial level instead of at the Brezhnev-Giscard
meetings next month, as the Soviets had wanted.
A third and more important agreement, involving
export credits, is still being negotiated. Paris report-
edly is flexible on the total amount of credits but is
asking an interest rate of 7.75 percent. The Soviets,
however, are adamantly demanding 6.5 percent. In view
of France's growing economic problems and its ambitious
export goals, some softening of the French position is
possible. The French negotiators are returning to Mos-
cow next week, but they are not likely to go below the
7.5-percent minimum agreed to with the other major West-
ern countries last month.
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National Intelligence Bulletin
November 15, 1974
The designation on November 14 of Politburo-candidate
member Petr Demichev as minister of culture succeeding
Yekaterina Furtseva, who died late last month, is a signal
that the Politburo intends to continue its scrutiny over
the implementation as well as the making of cultural policy.
The 56-year-old Demichev has been the party secretary
in charge of propaganda, culture, and party indoctrination.
He thus takes over the less important governmental post in
a sector that has long been his party responsibility. Past
practice suggests that Demichev's ministerial appointment
will lead to his eventual removal from the secretariat.
While members of the policy-making Politburo may and do
hold government posts, members of the policy-implement-
ing secretariat traditionally do not.
In cultural affairs, Demichev has generally been a
neutral influence in leadership councils. His departure
from the secretariat could signal dissatisfaction with
his performance. Shortcomings in this sector have been
one of the main issues of the heavily publicized campaign
for ideological vigilance that has been under way since
late summer.
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National Intelligence Bulletin November 15, 1974
IRAQ
US officials in Baghdad see the Iraqi cabinet
shakeup on Monday as the most significant since the Baath
Party took power in 1968. They believe that Baath Party
strongman Saddam Husayn Tikriti has consolidated his con-
trol over state machinery and strengthened the cohesive-
ness of the regime. He has installed party members loyal
to him in key posts.
The new cabinet demonstrates once again that the
Baath Party has no intention of sharing power with the
Communists, Arab nationalists, or any other group. On
the other hand, the naming of a number of well-qualified
men does point to a continuation of the trend toward
more independent and pragmatic policies.
US officials believe that President Bakr, who also
retains his post as defense minister, maintained the po-
sition he held prior to the reshuffle. Saddam Husayn and
he will continue to share power.
The US representative in Baghdad considers the ap-
pointment of the US-educated Sadun Hammadi as foreign
minister a hopeful sign for Iraq's relations with the
West. Hammadi will probably be executor, however, rather
than formulator of Iraq's foreign policy, which is ex-
pected to continue to lean toward nonalignment.
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 National Intelligence Bulletin November 15, 1974
INDIA
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the Indians have decided to purchase 50 MIG-23s from the
USSR. For financial reasons the MIG-23 is India's most
likely choice, but such a decision has not been con-
firmed. Reportedly an agreement was also reached per-
mitting New Delhi to begin licensed production of the
aircraft in 1978.
Secretary of Defense Govind Narain recently admon-
ished the service chiefs and other officials for their
procrastination in refusing to accept the fact that,
given India's foreign exchange problems, liberal Soviet
credit terms are the only viable means of acquiring mili-
tary hardware.
The MIG-23 was not wanted because of past experi-
ence with other Soviet aircraft. This involved wing
cracks in MIG-21s, poor performance of aircraft fire con-
trol radars, and long lead time in parts replacement.
Air force concern over modest improvements in the
Pakistani air force in recent years and India's in-
ability to replace its aging aircraft through indigenous
production likely prompted the decision.
Acquisition of the MIG-23 would raise the attack
fighter capabilities of the Indian air force and main-
tain its position as the dominant air power in South
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National Intelligence Bulletin
November 15, 1974
Portuguese troops have restored order in Luanda
after a wave of violence that lasted a week and report-
edly resulted in at least 100 deaths.
According to the US consul general in Luanda, the
violence began with sporadic clashes in the city's black
slum areas and was later intensified when supporters of
the rebel Popular Movement for the Liberation of Angola
attacked their rivals in the National Front for the Lib-
eration of Angola and the National Union for the Total
Independence of Angola. The National Front temporarily
helped local forces impose order but was rebuffed by the
Portuguese authorities when it tried to assume a major
police role.
The restoration of order could be short-lived.
Luanda is the Popular Movement's political stronghold
within Angola and the special preserve of Agostinho Neto,
the movement's president. The National Front, however,
has more troops inside Angola than does the Popular
Movement and is infiltrating armed elements into Luanda.
The potential for a major clash between the rival
groups thus remains strong.
The Army High Command in the territory apparently
has realized that its locally recruited forces, most of
whom are black, cannot be counted on to take aggressive
action to enforce order. It has decided to establish
special units made up of troops from Portugal for use
in civil disturbances. Army leaders are hoping these
units will be more reliable and help dispel the popular
belief that the army has lost its will to fight.
According to press reports, the Lisbon-appointed
junta that runs Angola has now decided to drop its
earlier plan for a transitional government that would
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National Intelligence Bulletin
seems more remote than ever.
After the violence of the past week, such cooperation
November 15, 1974
include the liberation groups. The territory's secre-
tary for social communications has announced a plan for
a "guerrilla commission" that will "run parallel" to the
present Angolan government and eventually merge with it.
The commission apparently is to play an advisory role.
The new plan, however, appears to be little more
than new packaging of an old product and offers no solu-
tion to the local government's major problem--how to con-
vince the liberation groups to cooperate with each other.
Peking is continuing a policy, which began in Sep-
tember, of curtailing agricultural imports for the re-
mainder of 1974. A short-term foreign exchange problem,
together with the possibility of an improved harvest
outlook, could help account for China's efforts to cur-
tail scheduled imports.
In addition to reducing its scheduled grain imports
for 1974, China is now also delaying or seeking cancel-
lation of deliveries of some other goods.
As a result of these curtailed imports, China has
subchartered several vessels originally slated for use
in its own rain trade.
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National Intelligence Bulletin November 15, 1974
The EC may have made some progress this week toward
reconciling membership of the Eight in the International
Energy Agency and the Nine's participation in the French-
proposed consumer-producer conference. The process will
be helped if the new moves toward development of the EC's
long-stalled common energy policy pan out.
At an EC foreign ministers' meeting in Brussels,
French Foreign Minister Sauvagnargues called for agree-
ment at the summit next month on elements of a common
energy policy, a major French objective. He also spoke
positively about the efforts of the US-backed Interna-
tional Energy Agency, which is to be formally established
next week without French. participation. He "conceded"
that the EC Commission could assume an observer's role
at the IEA. In return, he implied, the summit should
endorse France's call for an oil conference early next
year in which the EC would participate as a single
entity.
French officials described the initial reactions to
these suggestions as quite favorable, although the UK
remains reserved about the consumer-producer conference.
The French were to discuss energy policies further with
the British this week in London.
The British and German foreign ministers, meanwhile,
have agreed that there is not enough time to adequately
prepare for a preliminary meeting of oil producers and
consumers--proposed by France for late November--prior
to the EC summit and President Giscard's mid-December
meeting with President Ford. In this connection, Sau-
vagnargues told the Nine that France would consult with
the US on energy matters in order to have the US reac-
tion prior to the next EC ministerial discussions in
late November.
An EC Commission proposal for discussions between
oil producing and consuming countries that emphasized
the need for prior development of an agreed EC position
was tabled at the Council but not discussed. Along with
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National Intelligence Bulletin November 159. 1974
the French recommendations at the Council, the Commis-
sion paper will be discussed by the ad hoc group on
summit preparations and then again by the EC Council.
There seems to be general recognition by France's
partners that only if there is progress on internal EC
energy measures will Paris be likely to change its mind
about participation in the IEA. The Commission has
stepped up its preparation of papers intended to form
the basis of a common policy, and several were discussed
by the EC Energy Committee this week.
The reactions of member-state energy officials to
the paper dealing with oil were along predictable lines,
with the British, Germans, and Dutch favoring relatively
freer market arrangements and the French urging greater
organization and public control over energy supplies
within the Community. On the political level, particu-
larly in Bonn and Paris, there may nevertheless be in-
creased interest now in finding formulas to mute such
differences--both so that the summit might claim some
success and in order to minimize contrastin approaches
to international oil coo eration.
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National Intelligence Bulletin
November 15, 1974
Spain: During his farewell call on Franco on No-
vember 13, Ambassador Rivero received the impression
that the Spanish leader is in surprisingly good health,
considering his recent illness and known medical in-
firmities. Franco was mentally alert and his voice
clearer than it had been on previous occasions. His
hands still tremble, but his handshake was firm and
there was no other evidence of general deterioration in
his physical condition.
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National Intelligence Bulletin
November 15, 1974
China-Japan: China and Japan yesterday agreed to
establish consulates in Shanghai and Osaka. No date
was announced for opening the new missions. The agree-
ment was reached during Chinese Vice Foreign Minister
Han Nien-lung's current visit to Tokyo, during which he
signed a Sino-Japanese shipping pact. According to
Japanese press reports, Han also planned to raise open-
ing negotiations for a Sino-Japanese peace treaty. The
way-was cleared earlier for opening the talks when
Peking agreed not to introduce the troublesome Senkaku
Islands issue into the negotiations.
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